Transfer Pricing Documentation Obligations in Turkey

Article 13 of Corporate Income Tax Law, regulating transfer pricing rules, was amended through the Law No. 6728 on the Improvement of the Investment Environment and in this scope additional authority was given to the Turkish President to determine transfer pricing procedures. The Presidential Decree No.2151 exercises this authority and fulfils the commitments Turkey has made at the international level. The most important issue in the Decree on transfer pricing is the new transfer pricing documentation requirements. Thus, the transfer pricing documentation requirements in Turkey are explained in brief as follows:

Master File

Operating in Turkey, companies that are members of multinational groups and whose both turnover and total assets are over TRY 500 Million must prepare a master file in accordance with the standard introduced by the OECD. Master file must be prepared for each year until the end of following financial year and submitted upon the request by Turkish Tax Authorities or tax auditors within 15 days.

Local File (Annual Transfer Pricing Documentation)

Although there is no significant change from the point of local file requirements, certain amendments are introduced in terms of scope. This change is in line with the local file standard developed by the OECD Action 13. The Presidential Decree does not bring a change in the period of preparation of the annual documentation, and it must be prepared until the due date for annual corporate tax return (April 30).

Country-by-Country Reporting (CbCR)

CbCR refers to a report that will be submitted to the Ministry of Treasury and Finance  by multinational companies. Based on the Decree, this reporting requirement is brought for the ultimate parent company of Turkish multinational groups, which has a consolidated turnover of 750 Million Euro. Companies in this scope are required to file their reports  until December 31 (within 12 months of the end of the accounting period for companies with special accounting periods). If there is CbCR exchange agreement between Turkey and respective country where the Turkish entity’s ultimate parent company is located, then no CbCR filing is required in Turkey.

However, it is required to file a CbCR notification for all companies which fall within the scope of CbCR. This notification is made through an electronic form submitted via the website of Turkish Tax Authorities. The period of notification requirement in this regard is determined as 6 month from the end of financial year. Accordingly, the CbCR notification is annually made until 30 June by all companies within the scope of CbCR reporting regardless of their parent company is resided in Turkey.

A summary of transfer pricing documentation obligations in Turkey is provided in the below table.